SEARCH BLOG: FEDERAL RESERVE
The "I" word is back in the Federal Reserve's vocabulary.
Ben Bernanke may have come to the conclusion that he didn't really accomplish much by lowering the Fed funds rate to 2%, so don't be surprised to see the rates go up to 3% sometime soon. 4% still seems like a good long-term target... without the constant yo-yo approach.
The world seems to think that 2% is just a tad low and reacted well to the news that further cuts were not going to happen. I suspect they suspect near-term rate increases.
Just don't go overboard like last time... too much, too fast. Remember that a 4 pp increase is just that whether the starting point is 2% or 5%. Too much, too fast just creates turmoil rather than stability...